ADDIS ABABA, Sept. 25, (Xinhua) - The UN Economic Commission for Africa (ECA) on Monday said the African Continental Free Trade Area (AfCFTA) is a unique and timely opportunity for the continent.
Andrew Mold, Acting Director of the ECA in eastern Africa, said on Monday that the AfCFTA "marks a fundamental step towards dismantling barriers and reducing costs to intra-African trade, boost industrialization, improve productivity and competitiveness of Africa for the creation of the much-needed jobs on the continent."
According to figures from the ECA, Africa's trade balance moved from a surplus of US$24 billion in 2012 to a deficit of US$87 billion in 2014 and US$155 billion in 2016. \
ECA further estimated that in recent years African imports have fallen, but not by enough to reduce the widening trade deficit, in which Africa's merchandise imports declined from US$642 billion in 2014 to US$501 billion in 2016.
"Exports, however, contracted significantly more than imports over the period, contributing to the region's widening trade deficit," ECA said in a statement.
The African Continental Free Trade Area, according to ECA, has the potential to boost intra-African trade by more than 52 percent through the elimination of import duties alone.
"It is estimated that the benefits would double if combined with trade facilitation measures to further reduce non-tariff barriers," it indicated.
According to Mold, Africa's trade with the rest of the world over the past six decades has not delivered the promised diversification and that most countries on the continent are still import-dependent and export excessive amounts of unprocessed commodities, resulting countries in Africa to run up large trade deficits.
Mold noted that the fragmentation of African economies limits the ability of African businesses to build their competitiveness.
"Integration is critical for Africa to drive manufacturing sector and industrialization and to boost its production and trade," the statement quoted Mold as saying.
"This matters because African trade deficits are principally driven by the lack of industrialization," he added.
From 2012 to 2014, over 75 percent of Africa's exports to outside the continent were extractives, such as oil and minerals, according to the ECA.
ECA further advised that as Africa's industrial exports are expected to benefit most from the AfCFTA, it is important for diversifying the continent's trade and encouraging a move away from extractive commodities towards a more balanced and sustainable export base. It also reiterated its readiness "to provide all the necessary support to the governments of the region to make the AfCFTA a reality."
The AfCFTA will officially come into force once at least 22 countries have ratified the agreement, potentially making the continent the largest trading bloc in the world.